The 22-year-old has been heavily linked with a return to Serie A after being involved in a bust-up with Roberto Mancini on January 3, and although AC Milan appeared to be frontrunners for the player's signature, their city rivals have now joined the race for the striker.

"No, it is not true. I am very, very happy [with Balotelli]," he told reporters.

Balotelli made his return for the first team in last weekend’s FA Cup win over Watford after missing the previous four due to illness.

Questions over a possible demotion were raised when the Italian turned out for the club’s Under-21s during the week – in which he scored twice – but Mancini insisted it was purely a matter of gaining fitness.

Mancini said: "He went with the Under-21s because he needed a game.

"After 40 days without a game, he needed one game. He trained well and I hope this year will be different."